Blackout cloth is very similar to proper screen material of the same gain - around unity. Unless the image your projecting is very large, say greater than 8ft wide, then you shouldn't need anything more than that.
Try to sit two times screen width away or more so that you can't see the pixel grid pattern.
Specs can be found here:
http://www.projectorcentral.com/Sanyo-PLC-XW15.htm
For fun, try playing a DVD from your pc to the projector using the vga. If you have a Radeon card and something like PowerDVD XP, you'll find you'll get a far better picture than from an ordinary dvd player, as the projector probably doesn't have a very good internal scaler. If you don't mind tweaking computers, read up the HCPC section and find out more.
As for cables, provided it's a half decent 75ohm cable, you don't need to spend loads of money on them. I did an experiment with component cables ranging from £5 to £35 and didn't see any difference. It's possible that cables costing considerably more than that *may* show a difference, but I wouldn't think it worth the outlay. A top bod from Arcam suggested the very same thing, so don't just take my word for it.
Gary.